Making an offer on a property

How to make an offer on a property, researching the market and what to look out for, including underquoting tactics and gazumping.

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Buying a property is often the biggest financial decision that a person will make, and making an offer is a significant step in that process. You should be prepared before submitting an offer to the agent or seller.

Steps to take when making an offer

Get a copy of the sale contract as soon as possible.
Have the contract examined by either a licensed conveyancer or solicitor.
Have your finance pre-approved
Make an offer verbally or in writing.

Tip: Putting offers forward in writing (for example, email) may help you keep track of negotiations and confirm why an offer wasn’t accepted.

Understand what agents should tell you about price

If you inspect a property and ask what the agent expects the property will sell for, the price information they provide cannot be less than their estimated selling price recorded in the agency agreement.

Note: the seller can instruct the agent not to publish or provide any price estimate to potential buyers. They do need to provide it to other people.

Understand what pricing information is provided

Agents do not have to provide the reserve price or the estimated selling price.

Remember that, for an auction, the reserve price may not be decided until auction day. See buying property at an auction for more information on preparing for auction.

The laws balance the interests of sellers, buyers and agents by:

increasing protections for prospective buyers by ensuring any price information provided is accurate
preserving the seller's opportunities to get the best possible price for their property
providing a level playing field for agents in a competitive market.

Underquoting – a buyer’s guide

Underquoting is when an agent falsely advertises a property’s estimated selling price or tells you that it will sell for an amount that is less than their actual estimated selling price in the agency agreement they have with the seller. This is an offence, and agents can lose their fees and commissions and be fined up to $22,000.

Research the local market

Before you make an offer on a property, or invest further in preparing to buy it, research prices for similar properties. Avoid relying too much on an advertised price guide. Treat the information as a guide and research the property and recent comparable sales in the area. Be wary if the agent's pricing information seems low for the market.

Note: If the final sale price is higher than the initial advertised price, this does not mean underquoting has taken place. Intense competitive pressure between buyers may mean the final sale price may vary from what could be reasonably predicted.

Understand estimated selling price factors

The laws state that when an agent provides an estimated selling price, it must be reasonable and based on factors likely to influence the price.

Factors include:

location
architectural design
future use of the property (eg. zoning, rights of way)
market demand,
comparable sales, and
seasonal and economic factors.

Read the underquoting guidance for agents information. You can also access NSW Fair Trading's agents' underquoting guidelines for residential property.

Protect yourself from underquoting

Ask the agent of the property you are interested in to:

put in writing their estimated selling price
explain what the seller’s expectations are.

The agent and seller may choose not to disclose any price, either in advertising or verbally.

Research recent sale prices for similar properties in the area. You may choose to use a property app or website to help with this.

Speak with different agents and keep dated records of your interactions with them.

Report suspected underquoting

If you suspect that an agent has underquoted their reasonable estimate of a property's likely selling price in either:

information provided directly to you or,
through marketing material

you can lodge a complaint online or call NSW Fair Trading on 13 32 20 (or phone our underquoting hotline on 1800 625 963).

You should include evidence with your complaint.

NSW Fair Trading inspectors may use this data to audit agents. They will check if there is a significant difference between the agent's supplied price estimate and what is recorded in the agency agreement. Inspectors can also check that agents have kept evidence to show that their property price estimates are reasonable.

How NSW Fair Trading deals with agents guilty of underquoting

NSW Fair Trading can ask agents to prove that they have based their selling price estimate on the relevant evidence available to them, for example, comparable sales in the area.

Fair Trading also responds to complaints from consumers and has the power to demand records from agents.

View the property watchlist

Finalising a sale – steps

If you make an offer, you are one step closer to owning the property, but it doesn’t mean that you have finalised the sale.

Making an offer

Before exchanging contracts, the seller may negotiate with other buyers for a higher offer. They can do this even if you have made an expression of interest payment.

Paying an expression of interest

Once you have made an offer, you may be asked to pay an initial deposit as an expression of interest. This won’t mean that the property is yours or that it gets taken off the market. It only proves to the seller that your offer is serious.

The seller or agent can take as many preliminary deposits as they like for the one property.

Your expression of interest deposit is refundable.

Before you pay an expression of interest deposit, the agent must give you the following information in writing:

the vendor has no obligation to sell the property,
the buyer has no obligation to buy the property, and
the deposit is refundable if a contract for sale of the property is not entered into.

Before the agent accepts the deposit, you must have signed a written statement to the agent confirming you have been given the above information, and you understand it.

The agent must inform you if other offers are made. You also have the right to make further offers until exchange of contracts has taken place.

Remember that the agent selling the property is not working for you, but for the seller of the property.

Getting a refund for an expression of interest deposit

If another person enters into a contract for sale of the property which you paid a deposit for, you are entitled to a full refund of your deposit. The agent must refund the expression of interest deposit within 14 days.

There are other considerations when making an offer on a property that hasn’t been constructed yet.

Learn more about buying off the plan

Resisting high pressure sales tactics

Agents can be persistent in their attempts to secure a sale, but they are not allowed to engage in:

high pressure tactics
harassment or
unconscionable conduct.

For example, an agent cannot call you straight after you have inspected a property and demand you make an offer by the end of the day.

If you have concerns about an agent’s conduct, lodge a complaint online or call NSW Fair Trading on 13 32 20.

Negotiating changes to the contract before signing

You can ask the seller to change the terms of the contract of sale before signing it. Ask a solicitor or licensed conveyancer to review the contract. They can provide important advice on what specific terms you should negotiate, or change given your personal circumstances. Note that the agent cannot make changes to the contract, only a licensed conveyancer or lawyer can.

Exchanging contracts

In NSW, a property sale is binding on the seller and buyer when contracts are exchanged between the 2 parties.

Exchange occurs when:

the seller signs their copy of the sale contract, and
the buyer signs their copy, and
the 2 parties exchange their signed contracts.

It is usual for the buyer to pay a deposit when exchanging contracts, usually 10% of the purchase price.

Gazumping

Gazumping occurs when an agent or seller accepts an offer you make to buy a property at an agreed price, but they sell the property to someone else. This usually happens when the vendor sells the property for a higher amount. The agent is legally obliged to pass on to the vendor any further offers received for the property up until the exchange of contracts.

If you are gazumped, neither the agent nor the seller is obliged to compensate you for any money you may have spent on:

legal advice
inspection reports
finance application costs or inquiries.

They must refund your expression of interest payment in full.

Protecting yourself from gazumping

Show Protecting yourself from gazumping

Always have your loan finance pre-arranged, and ensure you can pay the 10 percent deposit, by bank cheque or a deposit bond so there is no delay before trying to exchange contracts on a property.
Get a copy of the sale contract as soon as possible and have it examined by either your licensed conveyancer or solicitor.
Seek to exchange contracts with the vendor as soon as possible. Anyone buying residential property has a 5-day cooling off period starting from the time of exchange of the contracts. Only the purchaser can waive the cooling off period, and it can be extended by agreement.
During the cooling off period, you can do a building and pest inspection and have the contract examined. If you rescind the contract during this period, you forfeit 0.25% of the purchase price to the vendor, as the property has been taken off the market for a period of time. The amount forfeited comes out of the deposit you paid under the contract. If the amount of the deposit is insufficient, you will have to provide the necessary additional funds. You should find information relating to the cooling off period in your contract.
Negotiate with the vendor or real estate agent. Insist on the agent passing your genuine offers to the vendor. The law requires agents to inform the vendor of all offers up until exchange of contracts has taken place unless the vendor has instructed otherwise in writing. For example, the vendor instructs an agent not to advise of offers under a certain price.
You may wish to ask for evidence in writing that the agent has passed on your offer, but this is not required of an agent by law.
Be ready to exchange with a signed copy of the contract and follow through on the exchange process yourself or with another trusted person to ensure exchange.
If you are advised that other offers have been made, ask to have this in writing. While an agent is not bound to provide this information in writing most agents will do it.
If you are certain that you want the particular property, be prepared to increase your purchase offer to the vendor.
Be aware that the vendor is not generally compelled to sell to any specific person and can change their mind at any time before the exchange of contracts. Vendors may not always sell to the person that makes the highest offer; they may accept a lower offer from a prospective purchaser.

Related information

Underquoting guidance for property professionals

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